Great British Energy Bill

Debate between Lord Hunt of Kings Heath and Lord Howell of Guildford

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I am sorry to interrupt again—the Minister has been very patient—but can we be very clear on what he just said? Is he saying that GBE can involve itself and will be involved one way or another in part of the nuclear sector or not? This is very important: we need about 500 SMRs or AMRs to have the slightest hope of getting anywhere near net zero. At the moment we are plodding along, not very fast at all, and it requires all hands to the helm. So far, I understand that GBE is supposed to stand quite clear of nuclear. That does not make sense, because it is all one ball of wax, frankly. We have to get nuclear right, and only then will we get any hope of net zero.

[Lord Hunt of Kings Heath (Lab)]

Yes, I want to be absolutely clear: nuclear clearly falls within the definition of clean power, so it would be within the competence of Great British Energy to invest and do the other things in the Bill in relation to nuclear. However, we have Great British Nuclear, which I believe will continue. We are still finalising discussions, but GBN is focusing at the moment on small modular reactors. The department is involved in major funding of the nuclear developments, but GBE could also invest in nuclear energy. I hope that is clear.

I turn to oil and gas. Amendment 25 from the noble Earl, Lord Russell—and the noble Lord, Lord Bruce, who was not able to be present—would require Great British Energy to consider oil and gas supply chains and a reduction in and decarbonisation of oil and gas production. I say to the noble Earl that I understand the need for a just transition and acknowledge the skills of people working in oil and gas in the North Sea.

The Bill is focused on making the minimum necessary provisions to enable the establishment of this operationally independent company. Clause 3 provides the framework for Great British Energy’s functions and limits the areas where it can act, but it does not say how Great British Energy should deliver its functions or objectives. One of the worries about the noble Earl’s amendment is that it would widen the intention of this clause, perhaps unnecessarily. I say to him that, as we invest in the UK’s energy potential, we want to rebuild supply chains at home, of course. In relation to oil and gas, we want to help the transition and use the skilled workers in the most effective way possible. Oil and gas production in the North Sea will be with us for decades to come, so we want to manage the North Sea in a way that ensures continued support for that sector but enables some of the workers there to transition to other sectors, particularly in energy where they have such expertise.

Amendments 30 and 33 in the name of the noble Baroness, Lady Boycott, wish the Government to confirm or state that biomass is not included in the definition of clean energy in the Bill. Although I understand that many noble Lords share her viewpoint, as was clear from the Oral Question we had a few weeks ago, the Government believe that biomass plays a role in balancing the energy grid when intermittent renewables are not available. It is well evidenced that sustainably sourced biomass can provide a low-carbon and renewable energy source. That view is supported by both the Inter- governmental Panel on Climate Change and the Climate Change Committee.

Biomass sourced in line with strict sustainability criteria can be used as a low-carbon source of energy. Woody biomass that is sustainably sourced from well-managed forests is a renewable, low-carbon source of energy, as carbon dioxide emissions released during combustion are absorbed continuously by new forest growth.

The noble Baroness mentioned the Ofgem investigation, which she will know was about incorrect data being provided. It would be fair to say that Ofgem did not find the process at fault; it was the data provided. She asked me what visits officials in my department had made to the US. Officials have been in contact with US regulators but I would be happy to provide her with more details on what we have been doing.

The noble Baroness also mentioned BECCS, as it is known, or bioenergy with carbon capture and storage. Again, the Committee on Climate Change and the International Energy Agency recognise that BECCS can play a significant role in supporting net-zero targets through the delivery of negative carbon emissions with the co-benefit of producing low-carbon energy.

The noble Lord, Lord Alton, spoke eloquently and passionately to Amendment 91 on tidal barrages. I listened to the noble Lord, Lord Cameron, too, who suggested that tidal barrage and, in particular, lagoons play to the UK’s strength. The noble Lord, Lord Wigley, also spoke. The National Energy System Operator—NESO—is leading a network innovation allowance project aimed at establishing a holistic knowledge base on the potential development and impacts of tidal barrage in Great Britain within the context of grid operability. That is a very important development that I hope picks up the point that noble Lords have raised—the situation may have changed over the past 10 or 20 years.

I look forward to discussing the Mersey barrage with the noble Lord, Lord Alton. When I did this job at the Department of Energy and Climate Change from 2008 to 2010, I chaired a forum that we established on the Severn estuary potential, so I would certainly be interested in taking discussions forward on the Mersey barrage.

I hope that I have reassured most noble Lords that the energy technologies they wish to see supported can be covered in the Bill, but Great British Energy must be allowed to make its own decisions within the context of the objectives and strategic priorities the Secretary of State will set.

Great British Nuclear: Modular Reactors

Debate between Lord Hunt of Kings Heath and Lord Howell of Guildford

Monday 2nd December 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, security is one of the key considerations not just on SMRs but on AMRs.

[Lord Howell of Guildford (Con)]

My Lords, there is a puzzle here. If the world acknowledges that SMRs and like designs can be built far more quickly than the larger-gigawatt traditional nuclear power stations, and if investors can be attracted to finance those SMRs—whereas the giants such as Sizewell, the so-called replica, will cost billions that will eventually fall on consumers and taxpayers—why are we not giving far more priority to ordering and developing SMRs and smaller reactors, as many other countries are doing? Many producers are finding that their order books are becoming full.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I think the noble Lord paints too bleak a position. The UK is very well placed in relation to SMRs, and the programme that GBN is taking forward is being watched with great interest by a number of countries. In relation to investment, as the chair of GBN, Simon Bowen, told the energy Select Committee last week, of course there are issues to do with risk, timing and potential delays with first-in-class designs. But as we gain momentum and produce more modular reactors, the efficiency of the programme will get better and better. That is why we have to give support at this stage, and why we see huge potential.

COP 29

Debate between Lord Hunt of Kings Heath and Lord Howell of Guildford

Thursday 28th November 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, on the issue of tidal potential, my noble friend may be interested to know that the noble Lord, Lord Alton, has tabled a related amendment for consideration in Committee on the Great British Energy Bill, and I look forward to discussing it. Of course, I recognise the potential, and we will be very happy to discuss that with the mayor and other local bodies—that is without commitment, I have to say.

On electric vehicles, obviously there has been a lot of discussion recently of the decisions of commercial manufacturers. We are committed to the manifesto commitment to phase out new cars powered solely by internal combustion engines by 2030. We realise that there are many challenges for industry at the moment. Ministers in the relevant departments are engaging with key industry figures, and obviously, we want to work very closely in partnership with industry to tackle some of the challenges that have been raised.

[Lord Howell of Guildford (Con)]

My Lords, the Minister made it clear that a number of targets appear to be floating around, as my noble friend touched on when he opened the discussion. Is the 2030 target anything to do with net zero, or is that just an ambition for cleaner energy? I have heard that target described as “base camp”, which means we have not started climbing even when we get there. Would he agree with that description? It is rather different from some of the descriptions the Government have offered in the past.

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is always interesting to have the noble Lord’s perspective, given his long-standing interest in energy. He enjoyed being Energy Secretary, and it is good that we have a department focused very much on energy issues. I think the target is consistent: 2030 is the aim for clean power; the 2035 goal we have agreed on the reduction in greenhouse gases is the UK offer that we have made. The actual target we have set is an 81% reduction in emissions by 2035, against a 1990 baseline. I am clear that this is consistent with 2030—in other words, the 2030 target takes us on to the 2035 target we have now agreed. The noble Lord asked that question on Monday, and we are clear that we are being consistent; and obviously, we are taking the advice of the Committee on Climate Change on this.

Renewable Energy: Costs

Debate between Lord Hunt of Kings Heath and Lord Howell of Guildford

Thursday 14th November 2024 Lords Chamber

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, it is a great pleasure to respond to this morning’s debate and I congratulate the noble Lord, Lord Frost, on initiating it. We have had an interesting discussion on many of the challenging issues that we face around energy. This is our third debate because, although the noble Lord was not present for it, we had one on electric vehicles, which covered many of the same issues. As the noble Lord, Lord Offord, said, we look forward to the Second Reading of the Great British Energy Bill on Monday.

I welcome the interest. It is so important, on an issue that is of such critical importance to our country, that your Lordships are making a real effort, debating some of the difficult challenges that we face. Clearly, there are different views. I agree with the noble Lords, Lord Frost and Lord Whitty, and the right reverend Prelate about the apposite nature of the debate happening at the same time as the discussions in Baku. I also take the right reverend Prelate’s point about our international responsibilities, which we very much understand.

In essence the noble Lord, Lord Frost, has argued today and in previous debate that he sees the net-zero consensus as breaking down. He has said previously, although he did not cover it much today, that he disagrees that investment in net zero will make us richer. He thinks that we should unwind and invest in gas and nuclear. I agree about nuclear. I note his detailed analysis of the costs of renewables. I will ensure that he receives a considered response. I have a response that I could read out, but it might be better if I wrote to him, with a copy to all Members of your Lordships’ House, since it is technical in nature. I get the substance of what he is saying. He will understand that I do not think the consensus was quite with him. There are clearly many different interpretations of the costs, not least, as noble Lords have said, the costs of not taking action. That is one of the great dividing lines between us. It was discussed by my noble friend Lord Hain, the right reverend Prelate and the noble Lord, Lord Oates, whose speech was about the costs of not taking action.

It is interesting that the noble Lord, Lord Frost, made no reference to climate change, as far as I can recollect. I find it very difficult to debate this without taking climate change as the context in which we develop these arguments. I say to the noble Lord, Lord Moynihan of Chelsea, that I see net zero not as a religion but as a rational response to evidence that is becoming clearer and clearer. The noble Lord, Lord Offord, said that he disagrees with the pace at which we are going—I understand that—but he does not resile from net zero. I do not want to waste your Lordships’ time repeating what other noble Lords have said about the impact of climate change. Clearly, it is with us. I took over the Climate Change Bill from my noble friend Lord Rooker in 2008. When we were debating it, it was almost an academic exercise in whether climate change was real. It was a future threat, but now it is with us. The noble Lord, Lord Oates, is so right about what is now happening. It is not a religion but a rational response to say that we have to take action and speed it up as quickly as we can.

I agree with the noble Lord, Lord Frost, that this requires a lot of investment. We cannot get away from that. I know that some noble Lords opposite are saying that the OBR, the Committee on Climate Change, my own department and NESO are all part of a blob. I hesitated to use the word, because it gives Michael Gove credibility and I think it is a word that is very disrespectful to many people who are doing the right thing—but noble Lords know what I mean. You cannot just dismiss the conclusions of those august, independent institutions. Their broad consensus is that we have to go down this route.

I quote the Committee on Climate Change:

“the net costs of the transition (including upfront investment, ongoing running costs and costs of financing) will be less than 1% of GDP over the entirety of 2020-2050, lower than we concluded in our 2019 Net Zero report”.

The party opposite has started to criticise the OBR, which is unfortunate, but it highlighted that delayed action on reaching net zero will have significant negative fiscal and economic impacts, which would be as true for Northern Ireland as for the rest of the UK, as the noble Lord, Lord Elliott, raised. Do we ignore or just dismiss this? I suggest not; that is the basis on which we make progress.

The National Energy System Operator has produced a report; I have realised that noble Lords can find evidence in it to support any case they wish to put forward, but I think that the substance of what it says is significant. It says that an

“investment programme averaging £40 billion or more annually”

can support “economic and job opportunities” across the UK.

I will briefly mention levelised costs to the noble Lord, Lord Frost. As the noble Lord, Lord Oates, suggested, he may not be comparing like with like, which is part of the problem of having a rational debate on the true cost of energy. For instance, you can have a levelised cost of electricity for offshore wind, which reflects the average cost to build and operate a plant, but it cannot be equated to the strike price. The strike price represents the price needed over the contract for difference for a project to be commercially viable, factoring in revenue, market and policy considerations. There are other points that I could make on that, but I think it best that I circulate a paper so that all noble Lords can see that.

I come to the issue that the noble Lord really raised. He agrees with net zero but thinks that we are going too fast. He and my noble friend Lord Rooker and the noble Lord, Lord Elliott, suggested that the 2030 target is unrealisable. We can look again at the NESO report, but it depends how you interpret it. I interpret it as saying that that is very challenging. I do not think anyone has resiled from that; of course it is challenging. It involves plumbing, as the noble Lord said, and there are issues with the planning system at the moment about the grid and what needs to happen, but we are working very fast to try to resolve some of them. I say to my noble friend Lord Rooker that we may not be of the same measure as the members of the original Lunar Society, in our great city of Birmingham, but we believe that we can meet those targets.

To the noble Lord, Lord Swire, I say that of course pylons are not popular. We understand that. I was interested in what he said about potential alternatives, although he will understand that the figures we have so far suggest that they are much more expensive at the moment. In the end, we have to make connections to the grid much quicker and we have to invest in and see an extension of the grid. This is inevitable and it will sometimes involve unpopular decisions. I accept that.

In relation to public opinion on the cost of energy to householders, the noble Lord, Lord Moynihan, made his point very well. I gently say that most of these costs actually occurred under previous Governments, over a long period. The decisions that we are taking now will have an impact—there is no question about that—but noble Lords need to accept that that was an inevitability given what needs to happen to start to invest in the move towards clean power.

The noble Lord, Lord Howell, was absolutely right when he said that this is but one part of the story. The decarbonisation of heating, transport and industrial processes represents an immense challenge too, as we go towards 2050. This is very well understood, and our debate on electric vehicles two weeks ago brought that home to your Lordships.

The noble Lords, Lord Howell and Lord Moynihan, the noble Baroness, Lady Finn, and others mentioned nuclear. I say to the party opposite that, when I was doing this job between 2008 and 2010, we had just taken the decision to go back to new nuclear and were in firm discussions about Hinkley Point C and its siting, the skilled jobs required and the supply chain. I understand that the final investment decision did not take place until 2017, so there was an awful lot of delay. There have been other issues too. The cost of the project was underestimated and there was an unrealistic assumption that taking a technology from France and putting it into Hinkley Point C would not involve design changes because of our approach to regulation.

In July, I went to see Hinkley Point C, and I met the chief executive yesterday to talk about progress. It is fair to say that considerable progress is now being made. It is the largest construction in the UK, if not in Europe. It is immensely impressive, and 65% of the value of the supply chain went to UK companies. Another point is that, when Sizewell C is developed and we get to final investment decisions, which I hope will be in the next few months, it is going to be a replica above ground of Hinkley Point C, so all the lessons that have been learned will be translated. Huge progress has been made between the first and second reactors.

Noble Lords will understand that I am very passionate about the role of nuclear. It provides the essential baseload and deals with some of the issues that noble Lords have mentioned. The issue of intermittency is well understood, and it is part of the cost of what we seek to do. Our approach is to take nuclear as the essential base load.

I think the noble Lord, Lord Moynihan, was a bit unfair about progress. The technology of the SMR programme is being appraised by Great British Nuclear at the moment, and I hope that over the next few months we will begin to see progress there. There is clearly great potential with AMRs as well. We are all excited by what is happening in the US and the link between the major media companies’ data centres and potential AMR technology, and I want the UK to be part of that.

On Wylfa, I understand its potential. We will come to decisions over the next few months.

A number of noble Lords mentioned oil and gas and the North Sea. I understand the potential that it still has, because we are still going to need gas and the flexibility of gas. We want to develop carbon capture, usage and storage to make sure that it is abated gas, which means that we wish to see an orderly transition. We are working, and will work, very closely with industry in relation to the North Sea.

Other technologies have been mentioned: the noble Lord, Lord Moynihan, mentioned hydrogen and the noble Baroness, Lady Whitaker, and my noble friend Lord Hain mentioned wave energy technologies. I readily acknowledge that all that may have a role to play. Essentially, we are ever-open to people coming forward with ideas and new technologies, but, at the moment, we think that in reaching clean power we need to focus on offshore wind, onshore wind and solar, alongside ensuring that the nuclear programme speeds ahead as quickly as it possibly can.

The noble Lord, Lord Frost, did not discuss this today, but implicit in what he says is his doubt about the impact on the economy of investing in renewables. The evidence we have is that many jobs will become available in future because of what is happening and our drive towards clean power. We reckon that 640,000 people are employed in the UK in what are described as green jobs, and that number is going to grow as we accelerate to 2030. We have an office for clean energy jobs that is going to focus on how we can develop the skilled workforce.

On the nuclear side, the national Nuclear Skills Taskforce has estimated that, by 2030, we need an extra 40,000 people. If the programme goes well and we have a continuous number of nuclear power plants being developed, that figure could go well over 100,000 by the 2040s. We are talking about high-quality, well-paid jobs in all these sectors.

In relation to the North Sea, many of the skills being used there are translatable. We want to make sure that happens as smoothly as possible.

[Lord Howell of Guildford (Con)]

My Lords, in a very interesting speech, the Minister said just now that, in the next few months—those were his words—some decisions will be made on the smaller end of modular reactors and so on. My understanding from Great British Nuclear is that no decision will be made before 2029. Is this a new position being taken up? If so, that is extremely encouraging.

[Lord Hunt of Kings Heath (Lab)]

I hope I have not just announced a new position. The position is that they are now going through a technology appraisal, which will take a matter of months. At that stage, the Government will then have to make decisions about what will happen in the future and on the funding, and we will have to have discussions with our friends in His Majesty’s Treasury in relation to that. Before that, I hope we will be having discussions about a final investment decision on Sizewell C.

I am in danger of overrunning. I thank the noble Lord, Lord Frost, again. This has actually been a very interesting debate, although he did not anticipate consensus. I am going to disappoint him on his request for yet another committee. I have picked up the suggestion by the noble Lord, Lord Browne, of an energy institute—without commitment, I should say, but it is very interesting. I am grateful to the noble Lord, Lord Frost, for instituting such an interesting debate.